NVIDIA 2015 Annual Report Download - page 53

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Based on the operating plan prepared for Fiscal 2015 as approved by the Board, the CC set the following goals for
Fiscal 2015 Variable Cash Plan award determination and PSUs that could become eligible to be earned:
Non-GAAP Operating Income Payout (% of Variable Cash Plan target award/target PSUs)
Threshold Goal (“Threshold”) . . . . . . . $500 million 25%
Target Goal (“Target”) . . . . . . . . . . . . . $660 million 100%
Maximum Goal (“Maximum”). . . . . . . $825 million or more 200%
(or 150% for our CEO)
The Fiscal 2015 Target goal of $660 million that the CC set for variable cash compensation and PSUs was higher than
the Target goal for Fiscal 2014 and approximated our Fiscal 2014 actual Non-GAAP Operating Income of $664 million.
The Fiscal 2015 Target goal, in line with the annual operating plan approved by the Board at the beginning of Fiscal 2015,
included budgeted investments in our future growth businesses and a probable range of revenue that took into account both
macroeconomic conditions and reasonable but challenging growth estimates for ongoing and new businesses. The CC
determined that for Fiscal 2015, the Target goal of $660 million was attainable with significant effort and success in execution,
and was not certain. In addition, the CC believed that for Fiscal 2015 achievement of the Maximum goal of $825 million
was a significant stretch and only possible with strong market factors and a very high level of successful execution and
performance by our management.
Under the Fiscal 2015 Variable Cash Plan and the terms of the PSUs, no cash would be earned and no PSUs would be
eligible to vest unless the Company attained or exceeded the Threshold goal of $500 million. The payout under the Variable
Cash Plan and the number of PSUs eligible to vest if Maximum performance was achieved was two times our NEOs’ target
amounts (with the exception of our CEO whose maximum PSUs was capped at 1.5 times his target amount in order to help
manage internal pay equity). For achievement between the Threshold and Target and between the Target and Maximum,
payouts were determined using straight-line interpolation.
Following the close of Fiscal 2015, the CC met and reviewed our financial results against the targets set at the beginning
of the year as explained above. For purposes of the Variable Cash Plan and the PSUs, the CC certified that the Company
achieved Non-GAAP Operating Income in Fiscal 2015 of $954 million, which resulted in the payout for Maximum
performance under our Variable Cash Plan and the maximum number of PSUs becoming eligible to vest, each as more fully
described below.
Changes to our Fiscal 2016 Performance Metric and Period for PSUs and Variable Cash Compensation
In Fall 2014 (after we had set the above metrics), we had meetings with the corporate governance groups of several of
our large stockholders. During these meetings, several of our large stockholders supported the use of PSUs and noted that
they prefer a multi-year performance period for PSUs and also prefer that we use different financial metrics for determining
awards under our Variable Cash Plan and PSUs. While formulating our executive compensation for our fiscal year ending
January 31, 2016, our CC considered this feedback and made the following changes for the Variable Cash Plan and the
PSUs granted in fiscal year 2016, which will be discussed in detail in the proxy statement for our 2016 Annual Meeting of
Stockholders:
• Changed our Variable Cash Plan performance metric to an annual revenue metric;
• Used annual Non-GAAP Operating Income as a performance metric for a portion of PSUs that are determined
based on one-year performance period; and
• Introduced a three-year total shareholder return metric for a portion of PSUs that are determined based on a three-
year performance period.